The Nation just ran a good piece on American Plutocracy. Plutocracy, for those of you who don’t know, is a political system in which those with wealth rule. Under such a system, opportunities for social mobility are limited, and there’s an enormous disparity between those with money (and power) and those without it. Of particular interest in the Nation article is a graph demonstrating this extreme inequality as it’s evolved over time. Here are the key data points:
The greater the gap between the rich and everyone else, the more dangerously unstable economies become. In 1928, a year before the U.S. economy nose-dived into depression, the top one-hundredth of 1 percent of U.S. families averaged 892 times more income than families in the bottom 90 percent.
In 1980, the last pre-Reagan year, families in the bottom 90 percent averaged $30,446 in income, after adjusting for inflation, $72 more than the $30,374 comparable families earned in 2006. The top 0.01 percent in 1980 took home an average $5.4 million, less than one-fifth the $29.6 million average income of the super-rich in 2006.
In 2006 the top 0.01 percent averaged 976 times more income that America’s bottom 90 percent.
And I imagine that it’s gotten worse since 2006… And, to make matters worse, while income has risen for this group, the top marginal tax rate has fallen precipitously… Here are a few more take-aways from the graph:
In 1944 the top marginal tax rate – the rate on income in the highest tax bracket – hit 94 percent. In that year, taxpayers making more than $1 million, in 2005 inflation-adjusted dollars, paid Uncle Sam 65 percent of their total income in tax.
In 2005 taxpayers making more than $1 million faced a top marginal rate of 35 percent. Their deep pockets paid just 23 percent of their income in federal tax.
And, as a result of the rich making more money, and keeping more money, our nation’s wealth is concentrating in the hands of a relatively small number of people. We are essentially creating an American aristocracy.
There’s a hell of a lot that we need to do as a nation, but, right up there with getting ourselves out of the middle east, and funding alternative energy research, we need to start raising taxes on the super-rich. And we need to do a better job of framing the debate. We can’t allow an unchallenged FOX News make the tax debate about the 47% of American households that pay no federal taxes. We need to make it about the wealthy, who aren’t paying their share, and the companies like Exxon that earn tens of billions of dollars a year and contribute nothing in the way of taxes. We’ve got to stop Glenn Beck and his ilk from making this about “those conniving poor,” and make it about the facts. We need to show people how the effective tax rate on the rich has fallen precipitously over time, and explain how that increases instability. We need to show people why it is that the American middle class is drying up and blowing away.
And I realize that some will read this and say that I’m advocating class warfare. I’m not. I’m not saying that we should take money from the rich and hand it over to the 50% of Americans that have nothing. I’m not a proponent of wholesale wealth redistribution. What I am in favor of, however, is the wealthy paying their fair share, so that we can educate our children, help our fellow citizens when the need a hand, and invest in the future our nation. And, if the Democrats can’t articulate that, we need a new party that can.